SHANGHAI—China’s car market notched another substantial gain in August, as consumers continued to take advantage of a tax break to buy vehicles while the market’s growth reflected comparative weakness in the year-earlier period.

Foreign and domestic auto makers delivered about 1.8 million cars including sedans, sport-utility vehicles and minivans to dealers last month, up 26% from a year earlier, the China Association of Automobile Manufacturers said Friday. August was the fourth consecutive month in which sales grew at a double-digit rate.

Recent gains haven't come as a surprise given the market’s poor performance a year earlier.

China’s car sales fell for three months in a row in the summer of 2015, when plummeting stock prices disrupted purchases of big ticket items including cars. In a bid to resuscitate the auto industry, Beijing in October halved the 10% purchase tax on vehicles with engines no larger than 1.6 liters.

More than 70% of cars sold in China qualify for the tax break, said Shi Jianhua, a deputy secretary-general of the manufacturers’ group. In the first eight months of this year, auto makers sold 14.4 million cars, up 13% from a year earlier.

With the tax break due to expire at the end of the year, industry participants and analysts have expressed concern that growth could stall next year in the world’s largest car market.

“We hope the policy can continue,” said Mr. Shi, adding that the association plans to request that the central government extend the tax benefit.

The automotive industry has been one of the few bright spots in China’s economy, which is struggling with a lingering slowdown and overcapacity. Consumer inflation recorded its smallest increase in August since October, government data showed Friday.

Thanks to quickening demand for cars, dealers maintained their inventories at healthy levels, said the China Automobile Dealers Association, a government-backed trade group. Nationwide, the average inventory at dealerships was equivalent to about 43 days of sales in the past two months, the association said. Anything above 45 days is considered unhealthy for dealers.

Overall vehicle sales of passenger and commercial vehicles increased by 24% in august from a year earlier, to 2.1 million.

Many auto makers reported strong sales in China in the month.
General Motors Co.
delivered about 293,500 vehicles to Chinese consumers last month, up 18% from the same time last year, saying all its brands saw gains. Ford’s car sales rose 22% to 96,450 vehicles, Honda’s were up 36% at about 106,600 cars and
Nissan’s
gained 17% at 103,800.
Volkswagen AG
hasn’t disclosed its August shipments.

SUVs and crossovers remained the biggest winners in terms of growth in August. More than 654,000 SUVs and crossovers combined were sold in China, 44% more than a year earlier, according to the manufacturers’ group. In the year to date, 16.8 million motor vehicles including cars, trucks and buses have been sold, 11% more than the previous year.